1.2 Socio-Economic Driving Forces

General. In the 1970s and 1980s, industry in the Caucasus was well-developed. The major industrial sectors were: oil and gas, chemicals and machinery industries, ferrous and non-ferrous metallurgy, cement, fertiliser, light manufacturing and food processing.

In the Soviet period, rapid industrial development resulted in increased environmental pressures. From 1970 to 1990 overall production, for example, increased three times in the South Caucasus. However, the level of industrial development was still less the union average value. After the USSR was dismantled, industrial production sharply declined in the Caucasus region, because of the energy crisis and the break of economic ties between the former Soviet republics. Recently, some signs of industrial revival have appeared. However, the growth rate is still insignificant.

In general, industrial activities are not equally distributed across the region. Most industrial centres are located in lowland zones along the railways, concentrated in large cities.

Manufacturing Sector. Some of the most important environmental problems in the Soviet period were connected with manufacturing industries. The Caucasus was not as heavily industrialised as European Russia, and suffered less environmental pollution, but the impact of industry on the environment was not unimportant. Of the heavy industries, oil processing, chemical, metallurgical, machinery and cement manufacturing plants were built, which created some of the most significant centres of pollution. Beginning from the 1970s until the disintegration of the USSR, the increasing trend of impact on the environment from stationary sources was observed, in spite of the fact that a number of environmental legal acts were adopted and Soviet standards were among the strictest in the world. However, the lack of law enforcement from the government side and pollution controls from industry side contributed significantly to increased emissions into all environmental media. High pressures on environment from industry were traditionally due to extensive power and raw material consumption. Explanations for these can be attributed to many causes, the basic among them being the political-economic arrangement of the Soviet Union.

In general, the major focus was on economic growth and rapid industrialisation, without proper consideration of environmental issues. In centrally planned socialist systems, all means of production were owned by the state. Practically no attention was paid to the efficiency implications of pricing. State planners set minimal or no prices on inputs in order to promote industrial development. Consequently, the Soviet economy was extremely resource-intensive with economic sectors, including industry, over-utilising natural resources and polluting all environmental media.

Industrial production was significantly reduced in the 1990s. At present, some industrial sectors of industry are not functioning or are in severe crisis (working at 20-25% or less capacity). The fall of industrial production has resulted in some reduction in water and air discharges and industrial waste generation from stationary sources. Nevertheless, the reduction of environmental pressures from industry was not followed by major improvement in the state of the environment. “Old” sources of pollution, toxic industrial wastes, heavy metals accumulated in the ground, obsolete technologies and pollution control equipment remain important factors contributing to environmental pollution and degradation.

Mining Sector. An important factor influencing the environment, both during the Soviet period and today is open-pit mining operations (non-ferrous metals, manganese, coal, gravel, sands, quartz sand extraction), which are common in the Caucasus. Prospects for future development of extensive mining are likely. Therefore, the mining sector will remain an important factor affecting the environment. In many places, open mines are located on household plots and agricultural lands, causing land degradation, creation of badlands and development of geo-dynamic processes. Some of the mines situated at relatively high altitudes impose a direct threat to fragile mountain ecosystems and affect lowland habitats downstream from such mines. There are few land reclamation works, but where they occasionally are, they yield no results in mountainous areas.Of particular concern are tailings from extractive and processing operations. There is a high risk that pollutants from these tailings may leach into water systems. This often occurs in the regions where ores are being extracted. Oil and gas-prospecting companies in the Baku-Sumgayit area and the North Caucasus (Krasnodar, Grozny and Maikop) form important centres of pollution as well. Since the mining sector experienced a lower decline than the manufacturing sector in the 1990s, it is a proportionally larger force in the economy. 

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